Markus Schimmer

Companies appear to have adopted a new perspective on the role of their corporate headquarters (CHQ). Instead of considering it a cost factor that can be easily slashed, companies seem to have recognized the need for a stronger corporate hand. By analyzing recent patterns of CHQ change, this article provides valuable lessons on how companies handle this conflict between CHQ cost efficiency and value contribution. [http://performance.ey.com/2012/11/14/chq-redesigns-during-times-of-crisis/ Snapshot] [http://performance.ey.com/wp-content/uploads/downloads/2012/11/New-look-for-head-office.pdf Full Article]

Previous studies on strategic group dynamics have generated valuable insights into the industry-level determinants of changes in strategic group membership and group strategy. Complementary to this line of research, the present study focuses on the firm-level determinants underlying shifts in firm positioning within strategic group structures. Drawing on the behavioral theory of the firm, the study examines the influence of firm performance and performance aspirations on the extent to which firms strategically diverge from or converge towards their strategic groups. Empirical results from a longitudinal analysis of the strategic repositioning by 1191 US insurance firms over a 10-year time period (1999-2008) suggest that firms performing below aspirations show a greater inclination to diverge from their current strategic group than firms performing above aspirations. Industry conditions are found to moderate the relationship between performance aspirations and strategic divergence-convergence. The study's findings highlight the influence of performance feedback on strategic group dynamics, and the importance of considering the interplay between firm-level and industry-level characteristics in explaining strategic group dynamics.

Economists and politicians alike have had no shortage of advice on how to solve the so-called Euro Crisis. Their consultation stretches between two basic suggestions: a break-up of the EU or its further integration-with hopes that the adoption of either would resolve the current crisis. Yet, even as critics repeatedly call for EU leaders to take more decisive actions, time and again, European officials have made only last minute and seemingly unavoidable decisions. What are EU leaders doing?

The paper aims at extending extant research on sources of divestiture gains by suggesting a novel program-based perspective on divestitures and analyzing the performance of program divestitures in comparison to single "stand-alone" divestitures. Based on event study methodology, the authors analyze the abnormal returns of 160 divestiture announcements within the global insurance industry between 1998 and 2007. In contrast to prior research which relied on ex post statistical clustering to identify transaction programs, ad hoc corporate press releases issued with the divestiture announcements are used to categorize program divestitures. Empirical results suggest that program divestitures generate higher abnormal returns than stand-alone divestitures. Further analyses into the sources for these higher gains, however, do not provide support for experience effects as significant explanatory factors. Instead, results suggest that the scheduling of divestitures significantly impacts announcement returns. The scope and single industry setting of the study suggest future cross-industry research on the influence of divestiture program characteristics on divestiture performance and the conditions under which these programs improve divestiture performance. Managers are advised to refrain from piecemeal divestiture behavior lacking clear strategic focus. Instead, they are encouraged to bundle their divestitures as part of a divestiture program with a clear strategic intent and shared business logic. While prior research on divestitures has treated divestitures as isolated events, the paper directs attention towards the analysis of divestiture programs. Further, experience and timing effects, which have been widely absent from prior divestiture studies, are considered.